Machinima! Adventures of a Digital Content Company

Millions are watching. When will they cash in?

At the beginning, Machinima was all about Halo, the smash Xbox game centered on a futuristic alien rebel war that is now in its sixth incarnation. Then Machinima started moving into first-person-shooter games (those, for the uninitiated, are games in which the user kills lots of people), then sports games, then adventure games, and eventually, series. Today, Machinima’s YouTube channel features scads of seemingly random clips, yet it is actually a highly programmed environment. Among its products are daily series like Inside Gaming, instructional series on individual games, Wayne’s World-esque talk shows, fantasy battle series like Versus, reviews, events coverage and more. “We started remaking the traditional model,” says DeBevoise. “There were all these networks out there pushing their own sites. This was more like cable. YouTube pays for the bandwidth. They’re like the ultimate killer MSO.”

That’s where Machinima may be more than just a powerful super-niche. Some say the company pushed forward a media revolution, one in which massive networks can be built on YouTube, never involving a cable box. “The interesting thing about gaming is that it doesn’t do well on linear TV,” says DeBevoise. “Think of the old MTV model, where you’d have to wait for videos. If you’re a Gaga fan, you probably don’t want to sit through an Eminem clip. Gamers are the same. So Machinima works because it’s on demand. And with YouTube, it’s instantly global.”

“We don’t talk about cable households; we talk about getting on a billion devices,” adds Jay Sampson, a 15-year Microsoft veteran who became Machinima’s evp of global sales, marketing and advertising operations last August.

A billion views? A billion devices? Are these guys serious? Quite. The hiring of Sampson is a sign that Machinima is maturing into a serious business, as is the arrival of former EA executive Nanea Reeves, who last month was tapped as COO. Sampson has brought in 13 sales executives, adding staff in New York, Chicago and San Francisco. The company’s ad base was previously confined to makers of video games and movies, but Sampson and his team now have their sights set on categories including consumer electronics, automotive and packaged goods. Machinima boasts a client roster that includes Bing, Paramount Pictures, Motorola, Pizza Hut, Verizon and Unilever’s Axe, and ad sales have surged 300 percent over the last three years.

Meanwhile, Reeves seems to want to lessen Machinima’s reliance on YouTube while employing data to improve ad targeting. “We need to mature and become more data driven,” she says. “That’s our first big opportunity. We need to understand who our influencers are. We’re going to put the machine in Machinima.”

While goofy mashups and racy, profanity-laden clips of Halo might seem a tough sell, Machinima is so much more, having built an iron-clad slate of franchises, including reality shows such as Wrecknology (on which hosts review new products like the iPhone 4S—and then destroy them) and tent-pole scripted programs like Mortal Kombat: Legacy. That show in particular has been a smash for Machinima, generating 4 million to 6 million views per episode. As MTV’s Akel puts it, “Machinima isn’t really about machinima anymore.”

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